PRESERVATION, SPOLIATION & INFORMATION GOVERNANCE: HOW DO THESE FIT INTO RECORDS AND RIM?

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1 2017 by Ron Hedges and Ken Withers. Video and audio clips 2016 by The Sedona Conference and used with permission. INTERNATIONAL PRESERVATION, SPOLIATION & INFORMATION GOVERNANCE: HOW DO THESE FIT INTO RECORDS AND RIM? Presented by: Ron Hedges, JD and Ken Withers, JD

2 2017 by Ron Hedges and Ken Withers. Video and audio clips 2016 by The Sedona Conference and used with permission. INTERNATIONAL UNDERSTANDING AND OPERATIONALIZING THE NEW FEDERAL RULES ON EDISCOVERY: WHAT THEY MEAN FOR RIM, IG, AND IT Presented by: Ron Hedges, JD and Ken Withers, JD

3 Agenda: Part 1 Why electronically stored information (ESI) is different The duty of preservation New Federal Rule of Civil Procedure 37(e) Reasonable steps and defensible preservation

4 Agenda: Part 2 Cooperation: Rule 1 Proportionality: Rule 26(b)(1) Responses and Objections: Rule 34 Reasonable steps and Rule 37(e) Amendments to the Federal Rules of Evidence

5 Biographies Ron Hedges, J.D. Senior Counsel, Dentons US LLP Former United States Magistrate Judge Chair, Advisory Board, Digital Discovery & e-evidence, a Bloomberg BNA publication

6 Biographies Ken Withers, J.D., M.L.S. Deputy Executive Director, The Sedona Conference Co-author of best-selling law school textbook on ediscovery Former Senior Research Associate, Federal Judicial Center Former Director of Judicial Education. Social Law Library, Boston

7 Resources ARMA Generally Accepted Recordkeeping Principles, Information Governance Maturity Model, n=2 R.J. Hedges, Practice Pointer: A Primer on Rule 37(e) Remedial Measures A.K.A. Sanctions, 16 DDEE 349 (2016)

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11 PROBLEMS WITH ESI Voluminous and distributed Fragile yet persistent Capable of taking many forms Contains non-apparent information Created and maintained in complex systems

12 MORE PROBLEMS WITH ESI Personal computers at work and/or home Laptops, phones and tablets Networked devices ( Internet of Things ) Websites Removable media Third-party providers

13 Where were you on December 1, 2006?

14 Mark Zuckerberg Began writing code for thefacebook in January 2004 Signed up 2,000 colleges and 25,000 high schools by December 2005 Opened Facebook up to all users in September 2006

15 Facebook today 1.66 billion active users in September billion daily users in June 2016

16 iphone First iphone released June, billion active users in September billion daily users in June 2016

17 Just this year Zettabytes (3.5x1021) of unique information will be created worldwide That s 3,500,000,000,000,000,000,000 bytes That s all of the words spoken by humankind since the beginning of time - times 200

18 OVERPRESERVATION? We speak of preservation of ESI for litigation. But ESI is created and retained for various reasons: Business needs Compliance with statutes and regulations Records retention policies What is the interaction between these and the duty to preserve? Austrum v. Federal Cleaning Contractors, Inc., No. 14-cv (S.D. Ca. Jan. 8, 2016)

19 The ediscovery Data Deluge In the average case, the equivalent of: over 48 million pages of documents are preserved; 13 million pages of documents are collected; and over 645,000 pages of documents are reviewed. In the YAZ/Yasmin litigation, produced over 90 million pages of data/documents, while in the In re Vioxx products liability litigation produced over 50 million pages of documents For the 12 month period ending October 1, 2013, collected roughly 1 billion pages from 3,000 custodians In the past 5 years, produced over 47 million pages at a cost of approximately $20.5 million for processing, hosting and production before a lawyer reviewed a single document

20 RECORDS RETENTION POLICIES What, if anything, might be a consequence of an organization s failure to comply with its own records retention policies? Brigham Young Univ. v. Pfizer, 282 F.R.D. 566 (D. Utah 2012) ( A violation of private corporate policy does not always equate to a violation of the law *** ) Begs the question: When does it, if ever? Spanish Peaks Lodge v. LLC v. Keybank Nat l Ass n, 2012 WL (W.D. Pa. Mar. 15, 2012) (considering whether parties instituted a document retention policy for the sole and express purpose of destroying documents *** )

21 RECORDS RETENTION POLICIES Isn t that a legitimate purpose of a document retention policy? Crawford v. New London, No. 11-cv-1371 (D. Conn. May 23, 2014) (finding no spoliation because (1) demand letter received after original DVD had been recorded over consistent with sixteen-day retention policy, (2) no evidence of culpable state of mind in recording over DVD, (3) identical copy of original DVD existed, and (4) no evidence that copy of lesser quality than original)

22 RETENTION DECISIONMAKING What might be asked when making risk management decisions about records retention? Has the particular information been accessed? When was the last date of access? Who accessed and why? What do records schedules inform about what information exists? Is there anything in the information related to actual or reasonably foreseeable litigation or investigation?

23 CONSEQUENCES: FEDERAL Rule 37(e) Failure to Preserve Electronically Stored Information. If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court:

24 CONSEQUENCES: FEDERAL (1) upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or

25 CONSEQUENCES: FEDERAL (2) only upon finding that the party acted with the intent to deprive another party of the information s use in the litigation may: A. presume that the lost information was unfavorable to the party; B. instruct the jury that it may or must presume the information was unfavorable to the party; or C. dismiss the action or enter a default judgment.

26 Slide Title Content Level 1 Content Level 2 Content Level 3 Content Level 4

27 CONSEQUENCES: FEDERAL Applies only to loss of ESI Defers to common law for trigger and scope of preservation Applies only if party failed to take reasonable steps Applies only when lost ESI cannot be restored or replaced with additional discovery

28 CONSEQUENCES: FEDERAL Explicitly rejects imposition of spoliation sanctions for negligence or gross negligence Permits so-called spoliation instruction, distinct from adverse inference jury instruction Allows jury to make finding regarding intent to deprive, and if so, presume prejudice

29 Common Law of Spoliation Armory v. Delamirie, 93 E.R. 664 (King s Bench 1722) Omnia praesumuntur contra spoliatorem: All things are presumed against the spoliator

30 CONSEQUENCES: FEDERAL What are reasonable steps? Perfection not required No strict liability

31 CONSEQUENCES: FEDERAL Since reasonableness is central to avoiding remedies: Will process become central to any analysis of reasonableness? (modus supra materiem) Yes or no, shouldn t process be documented and monitored for effectiveness and modified as necessary?

32 The 2015 Amendments to the Federal Rules of Civil Procedure

33 Five Year Process... Duke Litigation Conference May 2010 Mini-Conference (Discovery Subcommittee) Mini-Conference ( Duke /Sanctions Subcommittee) Original Rules Package Proposed August, 2013 Public Hearings (D.C., Phoenix, Dallas) 120 witnesses Public Comment Period Expires February, 2014 Revised Package Adopted April, 2014 Judicial Conference Approval September, 2014 Supreme Court Approved Rules Package April 29, 2015

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35 Effective Date: December 1, 2015 Amendments will govern in all proceedings in civil cases thereafter commenced and, insofar as just and practicable, all proceedings then pending. SCOTUS Order, April 29, 2015

36 Goals of the Amendments 1. COOPERATION among lawyers 2. Early, active judicial CASE MANAGEMENT 3. Change in scope of discovery: RELEVANCY and PROPORTIONALITY 4. Uniform national standard on SANCTIONS ( Curative Measures )

37 Amended Rule 1 These rules... should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding.

38 Amended Rule 1 Committee Note most lawyers and parties cooperate to achieve those ends [e]ffective advocacy is consistent with and indeed depends upon cooperative and proportional procedure This amendment does not create a new or independent source of sanctions. Neither does it abridge the scope of any other of these rules.

39 2015 Year End Report on the Federal Judiciary: The amendments may not look like a big deal at first glance, but they are. For example, Rule 1 of the Federal Rules of Civil Procedure has been expanded by a mere eight words, but those are words that judges and practitioners must take to heart. The underscored words make express the obligation of judges and lawyers to work cooperatively in controlling the expense and time demands of litigation an obligation given effect in the amendments that follow. The new passage highlights the point that lawyers though representing adverse parties have an affirmative duty to work together, and with the court, to achieve prompt and efficient resolutions of disputes.

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41 The Sedona Conference Cooperation Proclamation Cooperation in discovery is consistent with zealous advocacy Cooperative discovery is required by the Rules of Civil Procedure Publicly endorsed by over 200 federal and state judges Cited in over 50 published federal court opinions Incorporated into many standing orders

42 Case Management Amendments: Rules 16 and 26(f) Rule 26(f) Conference of the Parties; Planning for Discovery [...] (3) Discovery Plan. A discovery plan must state the parties views and proposals on: [...] (C) any issues about disclosure, discovery, or preservation of electronically stored information, including the form or forms in which it should be produced; (D) any issues about claims of privilege or of protection as trial-preparation materials, including if the parties agree on a procedure to assert these claims after production whether to ask the court to include their agreement in an order under Federal Rule of Evidence 502

43 Case Management Amendments: Rules 16 and 26(f) Rule 16(b)(1) encourages the court and the parties to engage in direct simultaneous communication in Rule 16 conferences Goal is early, active, hands-on judicial case management Rule 16(b)(3) Contents of the Order Provide for disclosure, discovery, or preservation of ESI May include agreements under FRE 502 May direct pre-motion discovery conference with the court

44 Case Management Amendments: Rules 16 and 26(f) Practice Pointers: Preservation is front and center in new rules Preparation is key for Rule 26(f) and Rule 16 conference

45 Case Management Amendments: Rules 16 and 26(f) Practice Pointer: Obtain a Rule 502(d) order at the start of every case

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47 Discovery Amendments: Rule 34 Early Requests Amended Rule 26(d)(2) Rule 34 RFPs can be delivered 21 days after Service of Summons RFP considered served at first Rule 26(f) conference Amended Rule 34(b)(2) Must respond to RFP within 30 days of service or if the request was delivered early within 30 days after the parties first Rule 26(f) conference

48 Discovery Amendments: Rule 34 Early Requests Practice Pointers: Goal is to use early RFPs to scope ESI discussions during Rule 26(f) discussions Courts will expect that requests be informally exchanged early; in advance of Rule 26(f) conference

49 Discovery Amendments: Specificity of Objections Amended Rule 34 Objections must be stated with specificity May state will produce documents and ESI but must do so within 30 days or another reasonable time specified in the response Objection must also state whether responsive materials being withheld

50 Discovery Amendments: Specificity of Objections Committee Note: The producing party does not need to provide a detailed description or log of all document withheld, but does need to alert the other parties to the fact that documents have been withheld and thereby facilitate an informed discussion of the objection.

51 Discovery Amendments: Specificity of Objections Request: Please produce the entire personnel files of plaintiff s supervisors, John Jones and Mary Smith. Old boilerplate response: Defendant objects because the request may call for the production of documents protected by the attorney/client privilege and/or work product doctrine. Further the request is overbroad and seeks information that is not relevant to plaintiff s claims or defendant s defenses and is not likely to lead to the discovery of admissible evidence. Notwithstanding the foregoing objections, Defendant will produce relevant, responsive, non-privileged

52 Discovery Amendments: Specificity of Objections New Specific Response: Defendant objects because the personnel files of John Jones and Mary Smith contain confidential personal and private information that would invade the privacy rights of these non-party employees. Moreover, their personnel files contain information that is not relevant to plaintiff s claims or defendant s defenses. Defendant is also withholding a memorandum contained in Mary Smith s file pertaining to plaintiff because the memorandum contains attorney/client privileged communications, and will log that memo on its privilege log. Defendant will produce by January XX, 2016 documents from John Jones and Mary Smith s personnel files that pertain to Plaintiff s claim of failure to promote, however, it is withholding the remaining pages of those files.

53 Discovery Amendments: Specificity of Requests Hypo: Employee nurse terminated for not promptly reporting incident of elder abuse Old request: Any and all documents concerning, regarding, or about Jane Smith s employment with Defendant. New Request 1: The portion of Jane Smith s personnel file that contains acknowledgements of the policies for which she was terminated. New Request 2: Records that reflect training provided to Jane Smith on the regulations for reporting elder abuse.

54 Discovery Amendments: Specificity of Objections Practice Pointer: Eliminate cookie-cutter requests, responses, and objections See e.g., Mancia v. Mayflower Textile Servs. Co., 253 F.R.D. 354, 357 (D. Md. 2008) (Grimm, J.) (the failure to particularize objections resulted in a waiver and also violates lawyer s duties under Rule 26(g))

55 Discovery Amendments: Specificity of Objections Practice Pointer: Develop standard language to describe response procedures See, e.g., Rowan v. Sunflower Elec. Power Corp., 2016 WL (D. Kan. July 13, 2016) (by describing the limits that have controlled the search for responsive and relevant materials, the responding party complied with Rule 34(b)(2)(C) and the requesting party could reasonably understand what has been withheld as non-responsive)

56 Amended Rule 26(b)(1): Proportionality (1) Scope in General. Unless otherwise limited by court order, the scope of discovery is as follows: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties relative access to relevant information, the parties resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.

57 Amended Rule 26(b)(1): Proportionality What has changed? No mention of subject matter discovery Proportionality factors incorporated into scope of discovery requested discovery must be both relevant AND proportional Proportionality factors updated and re-arranged Reasonably calculated to lead to discovery of admissible evidence language gone

58 Amended Rule 26(b)(1): Proportionality 1. Importance of the issues at stake in the action* 2. Amount in controversy* 3. The parties relative access to relevant information 4. The parties resources 5. The importance of the discovery in resolving the issues 6. Whether the burden or expense of the proposed discovery outweighs its likely benefit * Order of first two factors reversed from initial draft to avoid any implication that the amount in controversy is the most important concern

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60 Amended Rule 26(b)(1): Proportionality Although the concept of proportional discovery has been in the rules since 1983, neither the parties nor the courts were applying it Proportionality applies to both preservation and discovery

61 Rule 26: Other Amendments Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. Information within this scope of discovery need not be admissible in evidence to be discoverable. Language added in 1946 to make clear that inadmissibility was not a bar to discovery (avoiding a common deposition objection), but it was never intended to define the scope of discovery Committee Note: The phrase has been used by some, incorrectly, to define the scope of discovery.

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63 Amended Rule 26(b)(1): Final Note Practice Pointers: Remove reasonably calculated to lead to the discovery of admissible evidence language from your lingo (and any template forms) Remove all citations to Oppenheimer as defining the scope of discovery. See Cole s Wexford Hotel, Inc. v. Highmark, Inc., Civ. A. No , 2016 WL (W.D. Pa. Sept. 20, 2016) (Conti, C.J.) (in private antitrust action, proposed discovery to support damages experts testimony not relevant to claims or defenses, as experts proposed damages calculation implicated erroneous legal premise and would be inadmissible)

64 New Rule 37(e): A Real Sea Change

65 New Rule 37(e): Failure to Preserve Electronically Stored Information If electronically stored information that should have been preserved in the anticipation or conduct of litigation is lost because a party failed to take reasonable steps to preserve it, and it cannot be restored or replaced through additional discovery, the court: 1. upon finding prejudice to another party from loss of the information, may order measures no greater than necessary to cure the prejudice; or 2. only upon finding that the party acted with the intent to deprive another party of the information s use in the litigation may: A. presume that the lost information was unfavorable to the party; B. instruct the jury that it may or must presume the information was unfavorable to the party; or C. dismiss the action or enter a default judgment.

66 New Rule 37(e) Highlights Resolves differences between circuit courts regarding the culpable state of mind that could result in severe sanctions for the loss of discoverable ESI Bad faith required (5th, 7th, 8th, 10th, 11th) Bad faith not essential (1st, 4th, 9th) Balance culpability with prejudice (3rd) Negligence (2nd)

67 New Rule 37(e) Highlights Provides roadmap for otherwise complex spoliation analysis Establishes uniform national standard that forecloses reliance on inherent authority or state law Specifically rejects 2nd Circuit s Residential Funding precedent that authorized adverse inference on a finding of negligence or gross negligence BUT, does not define the trigger, scope, and duration of a preservation obligation

68 New Rule 37(e) Highlights Applies only to ESI, and only if ESI is lost Because [ESI] often exists in multiple locations, loss from one source may often be harmless when substitute information can be found elsewhere

69 New Rule 37(e) Highlights Provides roadmap for otherwise complex spoliation analysis Predicate elements must be met, then: If prejudice demonstrated, narrowly tailored curative measure may be ordered May include missing evidence instruction, with no presumption If specific intent to deprive is demonstrated, court may (not must) impose default, dismissal, or adverse inference Prejudice is presumed by virtue of intent

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71 Rule 37(e) and Reasonable Steps Committee rejected a detailed rule specifying the trigger, scope, or duration of a preservation obligation But Rule 37(e) protects parties who take reasonable steps to preserve ESI Reasonable steps are directly related to proportionality factors of Rule 26(b)(1)

72 Rule 37(e) and Reasonable Steps Proportionality factors enter into reasonableness analysis Sophistication and resources of the parties must be factored into analysis

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74 Rule 37(e) and Reasonable Steps The relative resources of the parties

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76 Rule 37(e) and Reasonable Steps The value of a written legal hold notice

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78 Rule 37(e) and Reasonable Steps Jerone J. English, Associate General Counsel and Director of ediscovery, Intel Corporation: No longer feels need to put entire departments on legal hold Analyzes the facts and identifies key custodians Documents the analysis and choices made

79 Rule 37(e) and Reasonable Steps Dean Kuckelman, Senior Counsel, Litigation and Discovery, Koch Companies Public Sector The rules changes haven t changed anything for us because (1) we were applying proportionality before the rules; and (2) the changes to Rule 37 haven t changed our practices because our primary driver is following the rules not avoiding sanctions.

80 Aaron Crews, Senior Associate General Counsel and global head of ediscovery, Walmart

81 Practice Pointers Identify key custodians Use data analytics to identify what ESI sources they use and who they communicate with Apply the proportionality factors in Rule 26(b)(1) Document the analytics and preservation decisions

82 Proposed Federal Rule of Evidence 902(13) Rule 902. Evidence That Is Self-Authenticating The following items of evidence are self authenticating; they require no extrinsic evidence of authenticity in order to be admitted: (13) Certified Records Generated by an Electronic Process or System. A record generated by an electronic process or system that produces an accurate result, as shown by a certification of a qualified person that complies with the certification requirements of Rule 902(11) or (12). The proponent must also meet the notice requirements of Rule 902(11).

83 Proposed Federal Rule of Evidence 902(14) Rule 902. Evidence That Is Self-Authenticating The following items of evidence are self authenticating; they require no extrinsic evidence of authenticity in order to be admitted: (14) Certified Data Copied from an Electronic Device, Storage Medium, or File. Data copied from an electronic device, storage medium, or file, if authenticated by a process of digital identification, as shown by a certification of a qualified person that complies with the certification requirements of Rule 902(11) or (12). The proponent also must meet the notice requirements of Rule 902(11).

84 Federal Rule of Evidence 902(11) and (12) Rule 902(11) and (12) Requirements: Certification of the custodian or another qualified person Must be signed in a manner that, if falsely made, would subject the maker to a criminal penalty Proponent must give an adverse party reasonable written notice of the intent to offer the record Record or data meets Rule 803(6) requirements

85 Federal Rule of Evidence 803 (6) Records of a Regularly Conducted Activity. A record of an act, event, condition, opinion, or diagnosis if: (A) the record was made at or near the time by or from information transmitted by someone with knowledge (B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit (C) making the record was a regular practice of that activity

86 Practice Pointers Designate custodians in advance for Rules 902(11) through (14) purposes Develop form certifications that will satisfy Rule 803(6) business record criteria for every likely source of ESI

87 Aaron Crews, Senior Associate General Counsel and global head of ediscovery, Walmart

88 Practice Pointers Have a pro-active litigation response plan in place Integrate new technologies and services into the litigation response plan

89 Thank you! Ronald J. Hedges Dentons US LLP 1221 Avenue of the Americas New York, New York P: E: Kenneth J. Withers The Sedona Conference 301 E. Bethany Home Rd., Suite C-297 Phoenix, AZ P: E: